a. Suppose the Japanese yen exchange rate is 114 = $1, and the United Kingdom pound exchange rate is 1 = $1.83. Also suppose the cross-rate is 191 = 1. What is the arbitrage profit per one U.S. dollar? (10 marks)

b. Suppose the spot and six-month forward rates on the Norwegian krone are Kr6.36 and Kr6.56, respectively. The annual risk-free rate in the United States is 4.5 percent, and the annual risk-free rate in Norway is 7 percent. What would the six-month forward rate have to be on the Norwegian krone to prevent arbitrage? (10 marks)